New Leadership Launches, Entering 2nd Term System... What Are the Key Points to Watch at the Telecom 3 Companies' General Meetings?

Reorganizing the Board of Directors... Likely to Accelerate New Business Expansion, M&A, and Corporate Governance Restructuring

[Asia Economy Reporter Seolgina Jo] The three major domestic telecom companies are set to embark on a "restructuring" starting with their shareholder meetings this month. Along with the launch of the second management term of President Park Jung-ho, who has led SK Telecom for the past three years, KT will officially inaugurate the Gu Hyun-mo administration. Each company is reorganizing its board of directors and showing notable moves to strengthen new businesses such as artificial intelligence (AI). Issues related to governance restructuring and mergers and acquisitions (M&A) are also drawing attention.

According to industry sources on the 9th, excluding routine agenda items such as approval of financial statements, SK Telecom’s main agenda is the reappointment of President Park as an inside director, while KT’s key agenda is the appointment of President Gu as an inside director. Additionally, SK Telecom, KT, and LG Uplus are all renewing their boards by replacing many inside and outside directors whose terms are expiring.

◆ SKT, Park Jung-ho’s Second Management Term = The SK Telecom shareholder meeting scheduled for the 26th is expected to reaffirm the ICT comprehensive company blueprint that President Park has emphasized so far. With his reappointment almost certain, President Park is expected to concretize governance restructuring such as establishing an intermediate holding company and accelerate efforts including company name changes and subsidiary listings during his second management term starting this year.

This is closely related to Park’s emphasis during his first term on moving away from traditional telecommunications, and fostering ultra-collaboration. SK Telecom also signaled its commitment to strengthening its AI business by adding Kim Jun-mo, an AI technology expert and associate professor at KAIST, to the new list of outside directors.

Strengthening internal cohesion through stock options will continue under Park Jung-ho’s second term. To this end, President Park has added agenda items to the shareholder meeting to expand stock options for executives and to allow the CEO to determine the amount of compensation paid to each executive. This reflects an intention to enhance corporate value through a thorough performance-based system. The executive compensation system will also be revised to include stocks in addition to cash.

◆ Official Launch of KT under Gu Hyun-mo = KT, transitioning from the Hwang Chang-gyu administration to the Gu Hyun-mo administration, has not yet announced its shareholder meeting schedule, but the last week of this month is likely.

This year’s shareholder meeting issues will focus on the appointment of President Gu, an internal personnel, as an inside director, and the new businesses that will be actively pursued under the new management. A large-scale reshuffle of the board is also expected. It is anticipated that President Kim In-hoe and President Lee Dong-myeon, who were appointed as inside directors along with current Chairman Hwang Chang-gyu, will be replaced. Attention will also be on whether action plans revealing President Gu’s specific strategies toward becoming an "AI company" will be unveiled. There is a high possibility that new businesses will concretely include B2B services related to the Data 3 Act.

Among the three telecom companies, LG Uplus will hold its shareholder meeting earliest on the 20th and aims to proactively execute its strategies. This is expected to accelerate the business restructuring emphasized by Vice Chairman Ha Hyun-hoe. A representative example is the spin-off of the electronic payment business to establish a separate corporation, Toss Payments. This move is interpreted as an effort to streamline non-core businesses and focus on 5G and paid broadcasting. The spin-off date is set for June 1 at midnight.

◆ National Pension Service’s Moves Also in Focus = Governance restructuring and M&A issues to be pursued in the future are also of interest. KT, which has been hampered by combined regulations, is expected to concretize its M&A strategy under the new management, while SK Telecom and LG Uplus, which have grown through paid broadcasting M&A, are also expected to seek acquisition targets. An industry insider predicted, "This year, concrete details regarding SK Telecom’s establishment of an intermediate holding company will emerge."

The moves of the National Pension Service (NPS) are also attracting attention. As a shareholder of the three telecom companies, the NPS recently changed its stockholding purpose to general investment. The market interprets this as a signal that the NPS may increase its level of vocal demands for governance improvements. An industry source said, "The NPS also cast dissenting votes at shareholder meetings in 2018," adding, "Since pressure could intensify, all three telecom companies are closely watching the situation."

This content was produced with the assistance of AI translation services.